The falling vacancy rates across five major office markets coupled with the execution of several significant leasing and capital transactions in HY20 have provided a significant tailwind for the Centuria Metropolitan Real Estate Investment Trust (REIT) (CMA).
The fund, which currently offers income streams from its $2.1 billion office portfolio across key office market, saw its statutory net profit for HY20 to grow to $24.7 million from $14.7 million a year earlier.
At the same time, funds from operations (FFO) went up to $39 million against $26.5 million in the prior year and distributions stood at 8.9 cents per unit (cpu). The firm said that both FFO and distributions were in line with FY20 guidance provided.
CMA’s fund manager, Grant Nichols, said that the execution of transactions helped enhance CMA’s asset quality, tenant covenants and weighted average lease expiry (WALE).
“As a result of executed transactions, CMA has increased its portfolio to 23 assets with an average building age of around 15 years, while the WALE has increased to 5.1 years and over 24.5% of portfolio income now being derived from government tenants,” he said.
During that period, CMA managed to maintain high occupancy of 99.2% and complete 24 lease transactions which included leases signed with WA Government for 10,875sqm in Perth and with Verizon agreement renewal for 3,528sqm in St Leonards in New South Wales.
As far as the further outlook for Australian market office was concerned, Nichols said that he was optimistic as ongoing demand supported by the low or falling vacancy rates were evident across the major cities and once coupled with a shift to lower interest rates in 2019 helped increase the relative attractiveness of commercial office property.
“Across the CMA portfolio we continue to generate reasonable levels of tenant demand, as tenants continue to seek opportunities to be located in quality, affordable office buildings that are generally located within close proximity to retail amenity and transport infrastructure,” he said.
